KPMG Cites Rapid Transformation in India's Gold Financing Market

SEATTLE (Scrap Monster): The accounting and advisory firm KPMG noted that the gold financing market in India is currently undergoing big transformation. The ongoing digitalisation drive, introduction of variety of online products and a gradual shift to organized formal sector are being cited as the key drivers for the transformation.

As per KPMG estimates, unorganized sector handles approximately 65% of gold financing activities in the country. While the urban population approach major banking institutions for gold loan, rural people still arrange finance from unorganized players, mostly pawnshops or local money lenders, who charge excessively high interest rates. The rural organized lending market is dominated by non-banking financial companies (NBFCs).

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The NBFCs have made significant progress in offering online tools to customers, powered by latest technologies including artificial intelligence (AI). As a result, customers could manage their gold loans sitting at home. The convenience offered by online platform has resulted in vast expansion of customer base, especially in rural areas. It is estimated that the country will have over 850 million online users by 2025.

NBFCs that specialize in gold loans have been reporting consistent increase in their market share.